Time to Buy Land?

Land prices have been falling for a while. And it seems like developers--both commercial and residential--that had large tracts of land have been trying to liquidate those holdings for a while. Now the New York Times is arguing that perhaps, because of these price drops, it's time to buy land once again. The story focused primarily on residential. Any thoughts on whether it makes any sense for commercial developers to invest in land today?

On a larger scale, H. Ray Alcorn Jr., an owner of Park Real Estate in Blacksburg, Va., is picking up commercial and residential parcels after two years on the sidelines. Mostly using cash, he has bought more than 100 acres throughout Virginia this year, some from lenders and much of it at reduced prices, and he has options to buy more.

“I'm looking at a lot of stuff, and I'm being very picky,” he said, explaining that the land he buys generally has zoning and various building approvals in place, making it easier to develop or resell.

By some accounts, acquiring land is the purest form of real estate investing. (As Mark Twain once said, “they've stopped making it,” at least around these parts.)

Yet buying land, even at today's prices, is not nearly as simple as it seems. Real estate experts raise many signals of caution, particularly for the neophyte investor.

“Because everyone's running away, some people think it's time to invest, but it's not for the faint of heart,” said C. Joseph Blackbourn, the president and chief executive of Everest Holdings in Scottsdale, Ariz., an active buyer of home-building lots in the Southwest since late last year. “There are a lot of expenses in holding land.”